US: weakening consumption tempers the 2026 growth outlook

The surge in energy prices, accompanied by second-round inflationary effects, has arrived at a time when US households are witnessing diminished real income growth. Data for the first two months of the year point to consumption growing at no more than 1% annualised in Q1, dragged down by very weak real income dynamics, and that is before the hit to purchasing power from the oil shock.